Third DCA Affirms Citizens’ Summary Judgment on Late Notice in Mario Arce v. Citizens Property Insurance Corporation

By Paris T. Baker

In Mario Arce v. Citizens Property Insurance Company, the trial court entered summary judgment in favor of the insurer after concluding the insureds materially breached the policy by failing to timely notify Citizens of a loss allegedly caused by Hurricane Irma.

The Court of Appeal of Florida, Third District, affirmed the trial court’s decision finding that it (i) properly concluded that the insureds breached the policy’s prompt notice provision; and (ii) the trial court correctly applied the presumption of prejudice that arises when an insured fails to timely notify the insurer of a loss to a covered property.

The Court acknowledged the opinion presents a conflict with the Fourth District’s decision in Perez v. Citizens Property Insurance Corporation, 345 So. 3d 893 (Fla. 4th DCA 2022), which holds that the language contained in the “Duties after Loss” provision of the Citizens policy upends the presumption and places the initial burden on the insurer to prove that it was prejudiced.

The Court agreed with the trial court in finding the insured was aware of the alleged damage to the home right after the hurricane despite the insured’s filing of a declaration that stated he was not aware of the damages until July 2020 or August 2020. Specifically, the Court held the insured’s declaration was legally insufficient because it failed to provide any explanation as to why he was unaware for nearly three years that the home had been damaged by Hurricane Irma. Therefore, the Court agreed notice was not prompt and the insured breached the prompt notice provision of the policy.

As for the second prong, the insureds argued the presumption of prejudice should not apply when the policy language expressly conditions the insurer’s contractual right to deny coverage upon breach resulting in prejudice—similar to the holding in Perez. However, the Court declined to adopt that approach, finding (1) the policy language exception to the presumption recognized in Perez frustrates the purpose of a prompt notice provision, (2) it is counterintuitive that an insurer should lose the applicable presumption simply because it has chosen to incorporate into its policy the common law requirement that to deny coverage, the insurer must be prejudiced, and (3) other panels of the District Court of Appeal have declined to adopt the rationale expressed in Perez.

In summary, the Third District Court of Appeal found that the prejudice provision in the subject policy is silent as to the parties’ respective burdens and declines to read into the burden-shifting that the Perez holding infuses in the policy language. Therefore, the Court concluded the trial court did not err in applying the presumption of prejudice that arose because of the insureds’ breach of the policy’s prompt notice provision.